Anda di halaman 1dari 22

HR Department Benchmarks

and Analysis 2007 ™

A comprehensive survey-based report


on the state of the human resources function.
HR Department Benchmarks
and Analysis™ 2007
HR Department Benchmarks and Analysis 2007

n ISSN 1540-2711 n

n ISBN 1-55871-541-X n

For inquiries about purchasing multiple copies of this


report, please contact either:

Charles DeFilippo, Director of Business Development


(cdefilippo@bna.com)

or Joshua Joseph, Research Director


(jjoseph@bna.com).

ii ©2006 The Bureau of National Affairs, Inc. • Washington, DC


Table of Contents

List of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x
About the Authors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xi
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xii

Chapter 1: Guide to Using This Report


Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Report Features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Quick Chapter Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Frequently Used Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Study Design, Method, and Presentation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Profile of Participating Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Chapter 2: HR Department Staffing


Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
How It’s Measured: The HR Staff Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
How It’s Presented: Staff Ratio Charts and Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Staff Composition of the HR Department. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
HR Staff Ratios That Exclude Administrative Staff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
How It’s Measured: Nonclerical HR Staff Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Behind the Numbers: Using HR Staff Ratio Benchmarks Effectively . . . . . . . . . . . . . . . . . . 25
Impact of Contingent Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Impact of Activity Load . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
How It’s Measured: HR Activity Load Scale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Specialists in Human Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Global Human Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Additional Trends in HR Staffing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

©2006 The Bureau of National Affairs, Inc. • Washington, DC iii


HR Department Benchmarks and Analysis 2007

Chapter 3: HR Department Expenditures and Budgets


Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
How It’s Measured: Per Capita HR Expenditures and Budgets . . . . . . . . . . . . . . . . . . . . . . 40
How It’s Presented: Per Capita HR Expenditures Charts and Tables. . . . . . . . . . . . . . . . . . 41
Budgeted HR Cost Per Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Projected Changes in Total HR Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
How It’s Measured: HR Budget as a Percent of Total Operating Cost . . . . . . . . . . . . . . . . . 50
HR Budgets and Total Operating Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Behind the Numbers: Benchmarking HR Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Other Factors Affecting HR Expenditures and Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
How It’s Measured: HR Salary Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
HR Salaries and Total Operating Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
HR Staff Salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Budget Projections for Core HR Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Budgeting for HR Technology and Consulting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Perspective: HR Technology: Getting Full Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Chapter 4: Measurement and Strategic Planning


Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
HR Drivers and Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
What Does HR Measure?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
HR Specialists and Measurement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Perspective: The Promise and Challenge of HRIS: Part I . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
HR Measurement and Planning in Aggregate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
How It’s Measured: Measurement and Planning Scale . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
HR’s Strategic Role. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Perspective: The Promise and Challenge of HRIS: Part II . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

iv ©2006 The Bureau of National Affairs, Inc. • Washington, DC


Chapter 5: Outsourcing HR Activities and Programs
Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Extent of Outsourcing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
The Other Side of Outsourcing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Perspective: When Outsourcing Arrangements Go Bad,
Firms Must Negotiate, Find Backup Vendors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Benefits and Employee Services Outsourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

Chapter 6: HR Activities
Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Changes in HR Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Employment and Recruiting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Behind the Numbers: Activities and Workforce Size. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Strategic Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Training and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Employee Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Perspective: Several Factors Drive Decisions on Performing HR Activities. . . . . . . . . . . . . 141
External Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Personnel / HR Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Health and Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

Appendix
Survey Instrument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149

©2006 The Bureau of National Affairs, Inc. • Washington, DC 


HR Department Benchmarks and Analysis 2007

List of Figures

Chapter 2: HR Department Staffing

Figure 2-1 HR Staff Ratios: 1996-2006. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15


Figure 2-2a HR Staff Ratios for 2006 by Workforce Size. . . . . . . . . . . . . . . . . . . . . . . 17
Figure 2-2b HR Staff Ratios for 2006 by Workforce Size. . . . . . . . . . . . . . . . . . . . . . . 17
Figure 2-3a HR Staff Ratios for 2006 by Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Figure 2-3b HR Staff Ratios for 2006 by Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Figure 2-4 Composition of HR Department Staff. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Figure 2-5 HR Staff Composition by Workforce Size . . . . . . . . . . . . . . . . . . . . . . . . . 21
Figure 2-6 Managerial/Professional HR Staff Ratios by Workforce Size. . . . . . . . . . . 23
Figure 2-7 Managerial/Professional HR Staff Ratios by Industry . . . . . . . . . . . . . . . . 24
Figure 2-8 HR’s Role in Hiring Contingent Workers. . . . . . . . . . . . . . . . . . . . . . . . . . 27
Figure 2-9 Median Staff Ratios by HR’s Role in Hiring Contingent Workers. . . . . . . 27
Figure 2-10 HR Activity Load Scale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Figure 2-11 Median HR Staff Ratio Adjusted for Activity Load Level . . . . . . . . . . . . . . 29
Figure 2-12 Prevalence of Human Resource Specialists by Area . . . . . . . . . . . . . . . . . 31
Figure 2-13 Prevalence of Human Resource Specialists by Workforce Size. . . . . . . . . 32
Figure 2-14 Locus of Design, Implementation,
and Administration of Global HR Policy . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Figure 2-15 Changes in HR Staff Levels: 2005 - 2006 . . . . . . . . . . . . . . . . . . . . . . . . . 34
Figure 2-16 Changes in HR Staff Levels: 1996 - 2006. . . . . . . . . . . . . . . . . . . . . . . . . 35

vi ©2006 The Bureau of National Affairs, Inc. • Washington, DC


Chapter 3: HR Department Expenditures and Budgets

Figure 3-1a Per Capita HR Expenditures Budgeted for 2006 by Workforce Size. . . . . 43
Figure 3-1b Per Capita HR Expenditures Budgeted for 2006 by Workforce Size. . . . . 43
Figure 3-2a Per Capita HR Expenditures Budgeted for 2006 by Industry. . . . . . . . . . 44
Figure 3-2b Per Capita HR Expenditures Budgeted for 2006 by Industry. . . . . . . . . . 45
Figure 3-3 Per Capita HR Expenditures by HR Activity Load. . . . . . . . . . . . . . . . . . . 46
Figure 3-4 Median Per Capita HR Expenditures Adjusted for Activity Load Level . . . 46
Figure 3-5 Median Per Capita HR Expenditures for 2006 by Organization Level . . . 47
Figure 3-6 Median Budgeted Changes in HR Expenditures: 1996-2006. . . . . . . . . . 48
Figure 3-7 Budgeted Changes in Total HR Expenditures: 2005 versus 2006. . . . . . . 49
Figure 3-8 Budgeted Changes in Total HR Expenditures: 2005 versus 2006. . . . . . . 49
Figure 3-9 HR Budget as a Percentage of Total Operating Costs: 1996-2006 . . . . . 51
Figure 3-10a HR Budget as a Percentage of Total Operating Cost
by Workforce Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Figure 3-10b HR Budget as a Percentage of Total Operating Cost
by Workforce Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Figure 3-11a HR Budget as a Percentage of Total Operating Cost by Industry. . . . . . . 53
Figure 3-11b HR Budget as a Percentage of Total Operating Cost by Industry. . . . . . . 54
Figure 3-12 HR Budget as a Percent of Total Operating Cost
by Reporting Relationship of HR Executive . . . . . . . . . . . . . . . . . . . . . . . 56
Figure 3-13 Per Capita HR Expenditure
by Reporting Relationship of HR Executive . . . . . . . . . . . . . . . . . . . . . . . 57
Figure 3-14 Median Per Capita HR Expenditures:
“With” versus “Without” Contingent Workers. . . . . . . . . . . . . . . . . . . . 57
Figure 3-15 HR Salary Ratio versus HR Staff Ratio: 1996-2006. . . . . . . . . . . . . . . . . . . 59
Figure 3-16 HR Staff Salaries as Percentage of Total Salaries . . . . . . . . . . . . . . . . . . . 60
Figure 3-17 Change in Median Staff Salaries: 1996-2006. . . . . . . . . . . . . . . . . . . . . . 61
Figure 3-18 Projected Changes in 2007 Budget Allocation . . . . . . . . . . . . . . . . . . . . 63
Figure 3-19 HR Technology and Budget Allocations by Workforce Size . . . . . . . . . . . 65
Figure 3-20 HR Technology and Budget Allocations by Industry . . . . . . . . . . . . . . . . 65

©2006 The Bureau of National Affairs, Inc. • Washington, DC vii


HR Department Benchmarks and Analysis 2007

Chapter 4: Measurement and Strategic Planning

Figure 4-1 Top Criteria Management Uses to Evaluate HR Performance. . . . . . . . . 74


Figure 4-2 Top HR Department Priorities for 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Figure 4-3 Frequency of HR Measurement and Planning . . . . . . . . . . . . . . . . . . . . . 79
Figure 4-4 Frequency of HR Measurement and Planning by Workforce Size. . . . . . 81
Figure 4-5 Frequency of HR Measurement and Planning by Industry. . . . . . . . . . . 83
Figure 4-6 HR Measurement and Planning: With and Without HRIS Specialists . . . 85
Figure 4-7 HR Measurement and Planning Scale:
Number of Areas that HR Measures Regularly . . . . . . . . . . . . . . . . . . . . . 90
Figure 4-8 HR Budget as a Percentage of Total Operating Cost
by Areas Regularly Measured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Figure 4-9 Regular Use of HR Measurement Tools by Workforce Size . . . . . . . . . . . 92
Figure 4-10 Reporting Relationships for HR Executives. . . . . . . . . . . . . . . . . . . . . . . . 93
Figure 4-11 Strategic Involvement of HR Departments Within the Organization. . . . 94
Figure 4-12 Level of Strategic Involvement by HR Reporting Relationship . . . . . . . . . 95
Figure 4-13 HR Involvement in Strategic Decisions
by Number of HR Measurement and Planning Activities. . . . . . . . . . . . . 96

Chapter 5: Outsourcing HR Activities and Programs

Figure 5-1 Prevalence of Outsourcing: 1997 - 2006 . . . . . . . . . . . . . . . . . . . . . . . . 102


Figure 5-2 Prevalence of Outsourcing by Industry Sector . . . . . . . . . . . . . . . . . . . 103
Figure 5-3 Most Commonly Outsourced HR Activities . . . . . . . . . . . . . . . . . . . . . . 104
Figure 5-4 Most Commonly Outsourced Activities by Workforce Size . . . . . . . . . . 105
Figure 5-5 HR Departments That Have Brought An Outsourced Activity
Back in House . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Figure 5-6 Top Motives for Benefits and Employee Services Outsourcing. . . . . . . 111
Figure 5-7 Motives for Outsourcing Benefits and Employee Services Activities
by Workforce Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Figure 5-8 Overall Ratings of Outsourcing Success
by Status of Activity Prior to Outsourcing. . . . . . . . . . . . . . . . . . . . . . . 113
Figure 5-9 Ratings of Outsourcing Initiatives by Years Outsourced . . . . . . . . . . . . 113
Figure 5-10 Favorability of HR Outsourcing Initiatives on Key Criteria . . . . . . . . . . . 115
Figure 5-11 Outsourcing Initiatives that Involve HR Staff Reductions. . . . . . . . . . . . 116
Figure 5-12 Who Initiated the Outsourcing Decision. . . . . . . . . . . . . . . . . . . . . . . . 116
Figure 5-13 Proportion of Activity Outsourced to Vendor . . . . . . . . . . . . . . . . . . . . 117

viii ©2006 The Bureau of National Affairs, Inc. • Washington, DC


Chapter 6: HR Activities

Figure 6-1 Changes in HR Responsibilities Within the Past Year . . . . . . . . . . . . . . . 122


Figure 6-2 Changes in HR Responsibilities: 1996-2006. . . . . . . . . . . . . . . . . . . . . . 123
Figure 6-3 Employment and Recruiting – Who Handles It?. . . . . . . . . . . . . . . . . . 125
Figure 6-4 Employment and Recruiting by Workforce Size. . . . . . . . . . . . . . . . . . . 126
Figure 6-5 Strategic Planning – Who Handles It?. . . . . . . . . . . . . . . . . . . . . . . . . . 128
Figure 6-6 Strategic Planning by Workforce Size. . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Figure 6-7 Training and Development – Who Handles It?. . . . . . . . . . . . . . . . . . . 130
Figure 6-8 Training and Development by Workforce Size. . . . . . . . . . . . . . . . . . . . 131
Figure 6-9 Compensation – Who Handles It? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Figure 6-10 Compensation by Workforce Size. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Figure 6-11 Benefits – Who Handles It?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Figure 6-12 Benefits by Workforce Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Figure 6-13 Employee Services – Who Handles It? . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Figure 6-14 Employee Services by Workforce Size . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Figure 6-15 Employee Relations – Who Handles It?. . . . . . . . . . . . . . . . . . . . . . . . . . 139
Figure 6-16 Employee Relations by Workforce Size. . . . . . . . . . . . . . . . . . . . . . . . . . 140
Figure 6-17 External Relations – Who Handles It?. . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Figure 6-18 External Relations by Workforce Size . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Figure 6-19 Personnel/HR Records – Who Handles It?. . . . . . . . . . . . . . . . . . . . . . . 144
Figure 6-20 Personnel/HR Records by Workforce Size. . . . . . . . . . . . . . . . . . . . . . . . 145
Figure 6-21 Health and Safety – Who Handles It?. . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Figure 6-22 Health and Safety by Worforce Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

©2006 The Bureau of National Affairs, Inc. • Washington, DC ix


HR Department Benchmarks and Analysis 2007

Acknowledgements

Thank you to the members of our expert Advisory Group for your time, thoughtful
comments, and willingness to collaborate with us on the 2007 HR Department Benchmarks
and Analysis Survey and report. Your insights, critiques, and encouragement added
substantially to this effort and to the final result.

Jacqueline M. Blanchard, SPHR Namrata Mundhra


Principal Human Resource Management Consulting
MHRP Associates Buck Consultants

Michael F. Cassidy, Ph.D. Howard Risher, Ph.D.


Professor, School of Business Private Consultant on Pay and Performance
Marymount University
David Stokes
Charles H. Fay, Ph.D. HR Manager
Professor of Human Resource Management Battelle Memorial Institute
Chair, HRM Department
School of Management and Labor Relations Allison Vaillancourt, Ph.D., SPHR
Rutgers, The State University of New Jersey Associate Vice President
Human Resources
David Harvey Jr. The University of Arizona
HR Counsel
Publix Super Markets, Inc. Lois A. Vitt, Ph.D.
Director
Jay J. Jamrog Insitute for Socio-Financial Studies
Executive Director
Human Resource Institute James Watt
President
Robert L. Mathis, Ph.D., SPHR Employee Benefit Solutions, Inc.
Professor Emeritus of Management
University of Nebraska at Omaha

The data collection effort for the Survey — including programming and Web hosting — was
managed and conducted by IntelliSurvey, Inc. They provided the highest level of quality and
service, while developing a product that fulfilled all our requirements. A special thanks to
Michael Endres and Jonathan Ephram.

Laura Lloyd-Henry of design25 graphics pulled it all together beautifully, designing and
laying out the report with patience and thoughtfulness.

And, finally, our special thanks to the HR executives who participated in this survey. It was
their cooperation in taking this somewhat lengthy and comprehensive survey, despite their
busy schedules, that made this report possible.

 ©2006 The Bureau of National Affairs, Inc. • Washington, DC


Chapter 1

Guide to Using This Report


HR Department Benchmarks and Analysis 2007

Overview

As it has for over two decades, HR Department Benchmarks and Analysis 2007 focuses on both
traditional HR functions and emerging issues in HR staffing, expenditures, measurement,
outsourcing, and related areas. Beyond providing respected metrics and analysis in these
areas, the report identifies factors that are actionably linked to more positive outcomes in HR
and organization wide.

Objectives

The report aims to help HR professionals use data more effectively, thereby enhancing
contributions to organizational success. To aid in these efforts, metrics are clearly defined,
results are rigorously analyzed, and their importance is discussed in the context of other
survey findings, examples, and commentary from outside experts.

The analysis and discussion of findings from the 2007 report help to inform important HR
decisions and answer practical questions such as:

n What are the normal ranges for key HR staffing and expenditure metrics and how do
industry, workforce size, and other factors affect benchmark comparisons?

n How does responsibility for hiring and processing contingent workers affect HR
department staffing and budget numbers?

n How can HR departments get greater value from their information systems?

n What do HR executives perceive as managements’ top criteria for evaluating their


performance and what are the implications for HR priorities and measurement?

n Under what conditions do organizations bring outsourced activities back in house and
what steps should be taken when outsourcing initiatives “go bad?”

To help readers more easily find and use information in this report, the remainder of this
chapter summarizes (1) report features, (2) organization of chapters, (3) frequently used
terms, (4) the survey methodology, and (5) demographics of participating employers.

 ©2006 The Bureau of National Affairs, Inc. • Washington, DC


Chapter 1: Guide to Using this Report

Report Features

HR Department Benchmarks and Analysis 2007 has a number of features that make the
research results both useful and easy to access. These include:

n Accessible metrics. To insure accurate benchmarking to the reports metrics, each chapter
has select pages that give the essential details of “How It’s Measured.”

n Clear organization. Each chapter begins with an overview and highlights of key findings.
Sidebars and notes in the text identify related information in other chapters.

n Focused perspective articles. Under the guidance of our research staff, seasoned BNA
reporters interview experts and thought leaders on topics that complement the survey
results. This year’s perspective articles focus on effective benchmarking, getting more out
of HRIS technology, and addressing sub-par outsourcing initiatives.

n Demographic profile of participating organizations. To provide added context for the survey
results, we summarize the demographics of surveyed employers. Categories include
industry, workforce size, annual revenues (or operating budget in the case of nonprofits),
geographic region, union representation, and more.

n Complete question set. Unlike many reports, we provide a copy of the full survey used to
collect the data. Users of the report can reference the survey instrument to see exactly
how questions were asked, allowing greater insight into the results.

n Vetted survey questions and results. The survey questions were reviewed and the report
findings were vetted with the help of a volunteer panel of HR experts. The panel
consisted of HR vice presidents at leading organizations, respected researchers, heads of
HR institutes, and recognized consultants in the field 1.

Tips For Using the Report


For an initial overview, skim the remainder of this chapter, including the Study Design,
Method, and Presentation (pages 6-7) and Profile of Participating Organizations (pages 8-10).
The Overview and Highlights sections that begin each chapter will help you get oriented.
Note that metrics are detailed in the chapter in which they first appear, while cross-
references help identify metrics used in more than one chapter. Results can be skimmed by
reading the one- or two-sentence bolded headings, which summarize key findings. These are
followed by bulleted analysis and, in many cases, relevant charts and tables.
If you prefer a narrative approach, look first at the Perspectives or Behind the Numbers
articles, which provide examples and expert commentary on select topics in a chapter.

1
Please see Acknowledgements for a complete list of advisors.

©2006 The Bureau of National Affairs, Inc. • Washington, DC 


HR Department Benchmarks and Analysis 2007

Quick Chapter Reference

Following this introductory chapter, the 2007 report is organized into five additional
chapters that address the following topics:

n Chapter 2 looks at HR department staffing. BNA’s staffing ratio metrics are presented
along with current-year data, breakouts by workforce size and industry, and related
analyses (e.g., global HR, use of contingent workers). Additional analyses focus on HR
staff composition and the use of specialists.

n Chapter 3 examines HR budgets and expenditures. Key budget metrics assess HR costs
per employee, HR expenditures as a percentage of total operating costs, HR salary ratios,
and more. The chapter also looks at spending on HR technology and how to get more
value from these investments.

n Chapter 4 examines the regularity with which HR departments engage in core


measurement and planning activities. The results are used to highlight relationships
between HR measurement and strategic involvement. Additional analyses address HR’s
reporting relationships, the role of HR specialists in measurement, and how to use HRIS
systems more effectively.

n Chapter 5 first addresses broad trends in outsourcing and highlights activities that are
most often outsourced by HR departments. The remainder of the chapter looks in detail
at outsourcing of benefits and employee services activities, factors that affect outsourcing
success, and steps to take when outsourcing initiatives sour.

n Chapter 6 examines the core competencies and activities of human resource departments
overall and by workforce size.

Each chapter begins with a brief overview and summary of key findings. The results are
organized into clearly labeled sections, with major findings always summarized in bold,
followed by more detailed descriptions and graphics, where appropriate. We consistently
report demographic breakouts by industry and workforce size wherever these results provide
meaningful information.

 ©2006 The Bureau of National Affairs, Inc. • Washington, DC


Chapter 1: Guide to Using this Report

Frequently Used Terms

Some terms in the report may not be immediately familiar or may have a specific meaning
within the context of this research. These include:

Median
The median is the exact mid-point or middle value within a set of numbers. This means
half the numbers in a set will fall above the median and the other half below it. We use the
median rather than the mean or average value when reporting most survey findings because it
helps ensure that a few extreme responses do not artificially distort the results.

Industry
The three broad industry groups used in this report are manufacturing, services/
nonmanufacturing, and nonbusiness.

The manufacturing sector is subdivided into three categories. Manufacturers of “basic


goods” include producers of tobacco, textiles, lumber, paper, chemicals, and petroleum;
manufacturers of “intermediate goods” include producers of food and beverages, apparel,
furniture, rubber and plastics, and fabricated metals; and manufacturers of “advanced” goods
include producers of machinery and computer electronic products, electric equipment, and
appliance and transportation.

The services/nonmanufacturing sector includes companies involved in transportation and


warehousing; utilities; wholesale and retail trade; finance, insurance, banking, and real estate;
communications and information; and business, personal, and miscellaneous services.

The nonbusiness sector includes organizations involved in health care, local government,
federal and state government, education, social services, and religious causes.

HR Department Level
HR departments can operate at any or all of three levels within an organization. HR
departments at the corporate level serve all employees in the organization by developing
company-wide HR policies and programs; division-level HR departments serve employees
at a divisional, regional, or group level; and HR departments at the facility level serve
employees at a single facility within a larger company.

HR Specialist
The survey defines a human resource specialist as a non-clerical employee who works
exclusively in one or two areas of human resources that require professional expertise.

Contingent Worker
A contingent worker is a temporary employee, such as contractor, intern, or casual
worker, usually working under contract for a fixed period of time or on a specified project.
Contingent workers typically do not receive the benefits or job security accorded employees
on an organization’s regular payroll.

©2006 The Bureau of National Affairs, Inc. • Washington, DC 


HR Department Benchmarks and Analysis 2007

Study Design, Method, and Presentation

HR Department Benchmarks and Analysis is a comprehensive survey of human resource


departments conducted annually by BNA. The essential details of how the 2007 data were
collected and analyzed are summarized below:

n This year’s Web-based survey was conducted between the dates of June 9, 2006 and
July 26, 2006. Eligible survey participants were human resource executives and managers
working for organizations with a separate HR function and a minimum headcount of at
least 25 employees. A total of 550 respondents completed the survey and provided usable
data.

n Respondents to the survey represent a cross section of U.S. employers. The participants
were drawn from three primary sources. A sample of 9,367 names from BNA’s existing
HR survey panel and subscriber lists was combined with a sample of about 11,000 HR
professionals from the member lists of Kennedy Information, a BNA subsidiary. To help
ensure a representative sample of participants, a postcard invitation was also sent to a
sample of 9,000 HR executives drawn from the Directory of Corporate Affiliations.

n The survey included a series of screening questions to help ensure that only eligible
participants — those with substantial familiarity and responsibility for HR department
staffing, budgets, and outsourcing decisions — were selected.

n Survey respondents include HR executives from organizations with single HR


departments as well as multiple HR departments. In the latter organizations, respondents
may represent corporate, division, or facility levels. Results show that only a minority
of respondents (16 percent) represents division or facility-level HR departments.2 In all
cases, respondents were instructed to provide data pertaining only to activities performed
and employees served at their own HR department level.3

n The survey was conducted on a secure site and several reminders were sent over the
eight-week survey period. As an incentive to participate, respondents were promised free
access to the survey results.

n Several steps were taken to assure survey participants that their responses would remain
confidential. First, as noted above, the survey was hosted on a secure Web site to make
sure that information submitted by respondents — particularly sensitive information
— could not be observed by third parties while in transit. Respondents were also assured
that no information identifying individual respondents or their organizations would be
used. Only aggregate data were analyzed and reported in the survey results.

2
See Profile of Participating Organizations for demographic breakout by HR level.
3
While survey responses sometimes differ by HR level, such differences tend to be highly correlated with workforce size.
Because we consistently report findings by workforce size in the survey, we chose not to report very similar findings by HR
level.

 ©2006 The Bureau of National Affairs, Inc. • Washington, DC


Chapter 1: Guide to Using this Report

n The number respondents reported in the analysis in different sections of the report does
not always equal the total of 550. The main reason is that some respondents were not
eligible to complete particular sections. For example, only HR departments with separate
budgets answered the HR expenditures questions (Chapter 3), while only those that
outsourced particular activities answered the outsourcing questions (Chapter 5). Finally,
because the survey is comprehensive and time consuming, some participants completed
most but not all sections.

n To simplify the presentation of figures in this report, we typically show only the overall
number of respondents (N) that provided data for each of survey sections. For some
analyses shown in the report, the actual number of valid responses will be smaller
than the stated N due to missing data or skip patterns in the survey. Additionally,
the percentages for figures in the report do not always add up to 100 percent due to
rounding.

n Because many of the questions asked in this year’s survey were also asked in previous
years, comparisons to survey findings from prior years are presented where appropriate
throughout this report.

©2006 The Bureau of National Affairs, Inc. • Washington, DC 


HR Department Benchmarks and Analysis 2007

Profile Of Participating Organizations

Workforce size, industry, and various other factors can affect how HR departments operate
and approach their responsibilities. The summary profile of participating organizations
presented below provides added context for interpreting the survey results.

Industry

Manufacturing . . . . . . . . . . . . . . . . . . . . . . . 25%
Basic manufacturing . . . . . . . . . . . . . . . . . . . . 6%
Intermediate manufacturing . . . . . . . . . . . . . .9%
Advanced manufacturing . . . . . . . . . . . . . . . . 9%
Other manufacturing. . . . . . . . . . . . . . . . . . . .1%

Services/Nonmanufacturing . . . . . . . . . . . . 42%
Retail and wholesale trade. . . . . . . . . . . . . . . .4%
Finance, insurance, banking
and real estate. . . . . . . . . . . . . . . . . . . . . . . 11%
Business, personal
and miscellaneous services. . . . . . . . . . . . . 11%
Communications and information services. . . 8%
Transportation, warehousing and utilities . . . 5%
Other Services. . . . . . . . . . . . . . . . . . . . . . . . . 3%

Nonbusiness . . . . . . . . . . . . . . . . . . . . . . . . . 33%
Health care. . . . . . . . . . . . . . . . . . . . . . . . . . .14%
Government. . . . . . . . . . . . . . . . . . . . . . . . . . . 7%
Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4%
Associations, social services
and other nonprofits. . . . . . . . . . . . . . . . . . . 7%
Other nonbusiness . . . . . . . . . . . . . . . . . . . . . 1%

Total Workforce Size

Less than 100 . . . . . . . . . . . . . . . . . . . . . . . . . . 12%


100 - 249. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19%
250 - 499. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19%
500 - 999. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17%
1,000 - 2,499. . . . . . . . . . . . . . . . . . . . . . . . . . .18%
2,500 - 4,999. . . . . . . . . . . . . . . . . . . . . . . . . . . .7%
5,000 or more. . . . . . . . . . . . . . . . . . . . . . . . . . . 8%

 ©2006 The Bureau of National Affairs, Inc. • Washington, DC


Chapter 1: Guide to Using this Report

Total Annual Organization Revenue


(Nonprofits reported total operating budget)

Less than $10 million . . . . . . . . . . . . . . . . . . . . 11%


$10 million - $49 million. . . . . . . . . . . . . . . . . . 26%
$50 million - $99 million. . . . . . . . . . . . . . . . . .14%
$100 million - $499 million . . . . . . . . . . . . . . . 28%
$500 million - $999 million . . . . . . . . . . . . . . . . 8%
$1 billion or more . . . . . . . . . . . . . . . . . . . . . . .13%

Regional Distribution of HR Departments

New England (ME, NH, VT, MA, CT, RI) . . . . . . . . . 5%


Middle Atlantic (NJ, NY, PA) . . . . . . . . . . . . . . . . 16%
East North Central (WI, MI, IL, IN, OH) . . . . . . . . 18%
West North Central (ND, MN, SD, NE, KS, IA, MO) . . . . . 11%
South Atlantic (FL, GA, SC, NC, VA, DC, MD, DE, WV). . . . .19%
East South Central (KY, TN, MS, AL) . . . . . . . . . . . 4%
West South Central (OK, TX, AR, LA). . . . . . . . . . . 8%
Mountain (NM, CO, WY, MT, ID, UT, AZ, NV). . . . . . . . . 6%
Pacific (WA, OR, CA, AK, HI) . . . . . . . . . . . . . . . . .13%

More Than One HR Department

Yes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27%
No. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73%

Level of HR Department

Corporate level. . . . . . . . . . . . . . . . . . . . . . . . . 82%


Single HR department. . . . . . . . . . . . . . . . .65%
Multiple HR departments. . . . . . . . . . . . . . 17%
Division level . . . . . . . . . . . . . . . . . . . . . . . . . . . .8%
Facility level . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8%
Other level. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2%

©2006 The Bureau of National Affairs, Inc. • Washington, DC 


HR Department Benchmarks and Analysis 2007

Union Representation

Yes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26%
No. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74%

Transition Within Last Two Years


(Organization merger, acquisition, or restructuring)

Yes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33%
No. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67%

Did Transition Result in a Reduction in Force?

Yes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49%
No. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51%

Is your organization a government contractor


covered by OFCCP (Office of Federal Contract
Compliance Programs) enforcement?

Yes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37%
No. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58%
Don’t know . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5%

10 ©2006 The Bureau of National Affairs, Inc. • Washington, DC


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